How billpayers are subsidising the dirtiest energy

The UK government has not only abandoned any pretence of a low carbon energy policy, but if anything they are going into reverse.

The latest IPPR publication highlights the government’s mad maths. Last year the government introduced a new energy policy which has awarded £109 million in subsidies, paid out of consumers’ energy bills, to new diesel generators, which are the dirtiest form of energy generation available, worse even than coal. That subsidy will increase in a second auction to be held in early December, by up to £434 million. At the same time, the government is slashing subsidies for green energy: solar subsidies, for instance, are set to be reduced by 87 per cent.

Solar subsidy cuts are likely to cost thousands of jobs. The Solar Trade Association surveyed more than 200 solar firms – estimated to be fewer than 10% of the total. It said if its findings were reflected across the industry, some 6,500 jobs may already have been lost and a a further 18,500 could be at risk. The TUC provided an earlier warning on job losses.

The government will claim the opposite is true with the announcement of a fixed end to coal-fired power generation in 2025. However, these stations have been failing and most are due to close before 2025 in any case. The shift to gas still needs Carbon Capture and Storage (CSS), but of course the government has abandoned that as well. Countries like Canada are taking over our lead.

Paul Elkins attempts to explain the government’s roller coaster policy on renewables, he said: “The only explanation I can come up with is that it has very little commitment to the UK’s carbon targets and an ideological hatred of renewables – ironic, given that polls show renewables to be the favourite energy source of the people the government is supposed to represent.”

ScottishPower CEO Neil Clitheroe has also pointed to the need for a consistent long term policy, otherwise investment will go elsewhere. He highlighted the opportunities for renewable investment in Mexico. EY Analysts at the same conference said:“Future renewables investment is likely to be constrained by recent changes to the support regime for low-carbon technologies, the potential lack of budget for further CfD allocations to 2020 and the lack of visibility on the level of funding beyond 2020,”

All of this simply confirms that the UK Government’s energy policy is at best inconsistent and short term – chaotic would be closer to the truth.